We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is Break-Even Time?

Malcolm Tatum
By
Updated Feb 17, 2024
Our promise to you
WiseGeek is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At WiseGeek, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Break-even time is the amount of time it takes to recoup the amount spent in securing an asset and begin to actually realize some sort of profit from the venture. Understanding how long this type of activity will take is very important when considering the purchase of different types of stocks, bonds, real estate, or other types of financial assets. By accurately projecting the break-even time associated with the acquisition of the asset, it is possible for investors to decide if a given deal is really worth the time and effort, or if their interests are better served by considering a different investment vehicle.

One of the easiest ways to understand what is meant by a break-even time is to consider a situation in which an investor must spent $5,000 US dollars (USD) to purchase an even lot of a given stock. Before making the purchase, the investor will look at the past and present performance of the stock to determine when and how much the unit price increases over time. Taking into account all factors that are likely to influence the movement of that stock price in the future, the investor can predict when that initial investment is recouped in terms of the increase in value of those shares, or the dividends that are paid periodically by the issuer of the shares. Assuming that break-even time is considered acceptable by the investor, acquiring the shares will make sense.

In order to accurately project the break-even time associated with any investment, there are several factors to consider. One has to do with what must actually be paid to acquire the investment. This means that along with the purchase price, the investor will also want to account for any brokerage fees or charges that are incurred during the acquisition. In some instances, the investor will also want to allow for taxes that are assessed on the returns generated by the asset.

Understanding market conditions and how they can affect the value of the acquired investments is also important to projecting the break-even time. While investors can often allow for events that are highly likely to occur, there is also the chance of unforeseen events to undermine the original projection, making it necessary to recalculate the date. For example, an unexpected natural disaster may cause the investment to lose money for a time before it begins to recover. Even events like the loss of a key figure in the issuing company’s leadership, unanticipated shifts in political policies or regulations, or the invention of some new product that renders the issuer’s product line obsolete can lead to the need to amend the break-even date from time to time. For this reason, arriving at a break-even date is not necessarily a one-time event, but something that must be revisited from time to time as circumstances either increase the returns earned or cause them to fall behind the original projections.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including WiseGeek, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.
Discussion Comments
Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Learn more
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.